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EXHIBIT 10.2
GRANT AGREEMENT
(As Amended December 3, 1996)
THE GOODYEAR TIRE & RUBBER COMPANY
PERFORMANCE EQUITY GRANT
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Reference is made to that certain Grant Agreement - Performance Equity
Grant dated January 4, 1994, whereunder you were granted Performance Equity
Grant Units (the "Units"). The Grant Agreement is hereby amended to provide as
follows:
The Directors of The Goodyear Tire & Rubber Company (the "Company") desire
to encourage and facilitate ownership of the Common Stock of the Company (the
"Common Stock") by key employees and to provide for additional compensation
based on the appreciation of the Common Stock, thereby providing incentive to
promote the continued growth and success of the Company's business. Accordingly,
the 1989 Goodyear Performance and Equity Incentive Plan was adopted effective
April 10, 1989 (the "Plan"). A copy of the Plan is attached.
At the January 4, 1994 meeting of the Compensation Committee of the Board
of Directors, you were awarded a Performance Equity Grant (each Unit equivalent
in value to one share of Common Stock) as follows:
Date of Grant 1-4-94
Number of Equity Units Granted
Performance Period 1-1-94 through 12-31-96
The number of Performance Equity Grant Units specified above (the "Units")
which you will earn at the end of the three-year Performance Period specified
above (the "Performance Period") will be determined by and contingent upon the
extent to which Performance Goals are achieved. The number of Units actually
earned may be adjusted between 0 and 150% of the number of Units stated above,
depending on the level of achievement of Performance Goals. In accordance with
actions taken by the Compensation Committee on November 5, 1996 and December 3,
1996, payment of the Units earned will be made as provided below. The
Performance Goals and earn out criteria for the Performance Period for your
Performance Equity Grant are described at Annex A.
The Performance Equity Grant for the number of Units specified above is
granted to you under, and governed by the terms and conditions of, the Plan and
this Grant Agreement.
Your execution and return of the enclosed copy of this Grant Agreement
acknowledging receipt of the Units granted herewith constitutes your agreement
to, and acceptance of, all terms and conditions of the Plan and this Grant
Agreement. You also agree that you have read and understand the provisions of
the Plan, this Grant Agreement and Annex A.
All rights conferred upon you under the provisions of this Grant Agreement
are personal to you and, except under the provisions of paragraph 14 of the
Plan, no assignee, transferee or
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other successor in interest shall acquire any rights or interests whatsoever
under this Grant Agreement, which is made exclusively for the benefit of you and
the Company.
As further consideration for the Units granted to you hereunder, you must
remain in the continuous employ of the Company or one or more of its
subsidiaries until December 31, 1996, the end of the Performance Period. Any
Units earned will be prorated in the event of your death, Retirement (as defined
in the Plan) or Disability (as defined in the Plan) or layoff prior to
completion of the Performance Period. Any proration is based on the last day you
worked. Nothing contained herein shall restrict the right of the Company or any
of its subsidiaries to terminate your employment at any time, with or without
cause.
You will forfeit the right to receive any distribution or payment under
this Grant if you enter into a relationship either as an employee, consultant,
agent or in any manner whatsoever with an entity that sells products in
competition with products sold by the Company and its subsidiaries within six
months after the earlier of (1) the date you receive your distribution of Units
earned or (2) the date you cease to be an employee of the Company or one of its
subsidiaries.
The number of Units earned will be paid as follows:
(1) Each Unit earned will be valued at a dollar amount equal to the
Fair Market Value of the Common Stock (as defined below) on December 31,
1996 (the "Unit Value").
(2) The Company will pay to you an amount equal to 50% of the Unit
Value multiplied by the total number of Units earned, less such
withholding and payroll taxes as the Company shall determine to be
necessary or appropriate, in cash in February of 1997.
(3) The balance of the Unit Value of each Unit earned, which shall be
equal to 50% of the Unit Value, shall be multiplied by the Unit Value of
the total number of Units earned (herein the "Deferred Amount") and
credited in February of 1997 to an account maintained in the records of the
Company. The Deferred Amount will be converted into Deferral Units (as
defined below). The number of Deferral Units will be determined by dividing
the Deferred Amount by the Fair Market Value of the Common Stock (as
defined below) on December 31, 1996.
(4) Notwithstanding the foregoing,the Compensation Committee of the
Board of Directors may, at its sole election, require that the payment of
the entire, or any portion of the, Unit Value of all Units earned shall be
deferred until the Optional Deferral Date, or such later date as it shall
deem appropriate, in order for the Company to comply with Section 162(m) of
the Internal Revenue Code. Any amount so deferred will be credited to an
account maintained in the records of the Company and will be converted into
Deferral Units, the number of which shall be determined by dividing the
amount so deferred by the Fair Market Value of the Common Stock on the date
of such deferral.
As used herein, the term: (1) "Deferral Unit" means an equivalent to a
hypothetical share of the Common Stock; (2) "Fair Market Value of the Common
Stock" means, in respect of any date on or as of which a determination thereof
is being or to be made, the average of the high and low per share sale prices of
the Common Stock on the New York Stock Exchange Composite Transactions Tape on
such date or, if the Common Stock was not traded on such date, the next
preceding day on which the Common Stock was traded on the New York Stock
Exchange; (3) "Dividend Equivalent" means, with respect to each dividend payment
date for the Common Stock, an amount equal to the cash dividend per share of
Common Stock which is payable on such dividend payment date; (4) "Mandatory
Deferral Date" means the earlier of (x) the tenth business day of the January
next following the fifth anniversary of the last day of the Performance Period,
or (y) the Optional Deferral Date; and (5) "Optional Deferral Date" means the
later of (i) the first business day of the seventh month following the month
during which you cease to be
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employed by the Company, or one of its subsidiary companies, for any reason
(whether Retirement, Disability, death, layoff, voluntary termination or
otherwise) or (ii) the tenth business day of the calendar year following the
calendar year during which you ceased to be an employee of the Company, or one
of its subsidiary companies, for any reason whatsoever. All computations
relating to Deferral Units, fractions of shares of Common Stock and Divided
Equivalents will be rounded, if necessary, to the fourth decimal place.
Each Deferral Unit credited to your account shall be credited with one
Dividend Equivalent for each Deferral Unit credited to your account on each date
on which cash dividends are paid on shares of the Common Stock (and each
fraction of a Deferral Unit shall be credited with a like fraction of a Dividend
Equivalent). Dividend Equivalents (and fractions thereof, if any) credited to
your account shall be automatically translated into Deferral Units by dividing
the dollar amount of such Dividend Equivalents by the Fair Market Value of the
Common Stock on the date the relevant Dividend Equivalents are accrued to your
account. The number of Deferral Units (and any fractions thereof) resulting
shall be credited to your account (in lieu of the dollar amount of such Dividend
Equivalent) and shall continually be denominated in Deferral Units until
converted for payment as provided herein.
The Deferral Units credited to your account shall be automatically
deferred until the Mandatory Deferral Date. If the Mandatory Deferral Date
occurs before you cease to be an employee of the Company, or one of its
subsidiary companies, you may elect, by delivering a written notice of your
election to the Company not later than December 31 of the calendar year which is
two calendar years prior to the year during which the Mandatory Deferral Date
occurs, to defer receipt of all or a specified whole percentage of the Deferral
Units credited to your account until the Optional Deferral Date.
On the Mandatory Deferral Date (to the extent you have not elected to
further defer payment until the Optional Deferral Date in the manner provided in
the prior paragraph, or unless payment has been deferred until the Optional
Deferral Date by the Compensation Committee), the whole Deferral Units in your
account will be converted at your election (which election shall be made in
writing on or before the June 30th next preceding the Mandatory Deferral Date),
into (1) a like number of shares of the Common Stock, (2) a dollar amount
determined by multiplying the number of Deferral Units credited to your account
by the Fair Market Value of the Common Stock on the Mandatory Deferral Date, or
(3) a combination of shares of the Common Stock and cash in accordance with your
election (which shall be expressed as a percentage of the Deferral Units to be
paid in shares of the Common Stock). In accordance with your election, within
five business days following the Mandatory Deferral Date you will be paid (a)
such number of shares of the Common Stock, (b) such amount of cash, or (c) the
elected combination of shares of Common Stock and cash, the amounts of which
shall be determined in accordance with the preceding sentence. If you did not
make a timely election as to the form of payment, you will receive payment in
shares of the Common Stock. Any fraction of a Deferral Unit will be paid to you
on the relevant date in cash, the amount of which shall be calculated in the
manner specified above.
If you have duly elected to receive payment of all or a specified
percentage of your Deferral Units on the Optional Deferral Date (or if the
Compensation Committee has deferred payment of the Unit Value of the Units
earned, or any portion thereof, or to defer payment of any Deferral Units, until
the Optional Deferral Date), you may elect, at the time and in the manner
specified below, to receive your Deferral Units in (1) a lump sum on the fifth
business day following the Optional Deferral Date, or (2) in a series of not
less than five (5) or more than ten (10) annual installments commencing on the
fifth business day following the Optional Deferral Date, or (3) a specified
percentage of your Deferral Units on the fifth business day following the
Optional Deferral Date and the balance of your Deferral Units in installments as
specified in clause (2) of this sentence.
On the Optional Deferral Date (to the extent you have not elected to
receive payment in installments), the whole Deferral Units in your account
(which have not been designated for payment in installments) will be converted
at your election (which election shall be made in writing on or before the last
day of the seventh month prior to the month during which the Optional
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Deferral Date occurs and shall apply to both lump sum and installment payments)
into (1) a like number of shares of the Common Stock, or (2) a dollar amount
determined by multiplying the number of whole Deferral Units credited to your
account by the Fair Market Value of the Common Stock on the Optional Deferral
Date, or (3) a combination of shares of the Common Stock and cash in accordance
with your election (which shall be expressed as a percentage of the Deferral
Units to be paid in shares of the Common Stock). In accordance with your
election, within five business days following the Optional Deferral Date you
will be paid (a) such number of shares of the Common Stock, (b) such amount of
cash, or (c) the elected combination of shares of Common Stock and cash, the
amounts of which shall be determined in accordance with the preceding sentence.
If you did not make an election as to the form of payment on or before the
required date, you will receive payment in shares of the Common Stock. Any
fraction of a Deferral Unit will be paid to you on the relevant date in cash,
the amount of which shall be calculated in the manner specified above.
If you desire to receive payment of your Deferral Units (or a percentage
thereof) in annual installments commencing with the Optional Deferral Date, you
may elect, by delivering a written notice of your election, which shall specify
the number of annual installments (not less than 5 or more than 10), to the
Company not later than December 31 of the calendar year which is two calendar
years prior to the year during which the Optional Deferral Date occurs, to
receive all, or a specified whole percentage of, the Deferral Units in your
account (which would otherwise be scheduled for distribution on the Optional
Deferral Date) in not less than five (5) or more than ten (10) annual
installments, payable commencing on the fifth business day following the
Optional Deferral Date and thereafter on the fifth business day following each
anniversary thereof until paid in full. Each installment shall be in an amount
equal to the total number of Deferral Units credited to your account on the
Optional Deferral Date, or on the anniversary thereof which is the fifth
business day prior to the date such installment is due and payable, as the case
may be, divided by the number of annual installments remaining (including the
annual installment then being calculated for payment) to be paid. In respect of
each installment, the number of Deferral Units payable shall, in accordance with
your election made in the preceding paragraph, be converted into (1) a like
number of shares of the Common Stock, (2) a dollar amount determined by
multiplying the number of whole Deferral Units credited to your account by the
Fair Market Value of the Common Stock on the relevant anniversary of the
Optional Deferral Date (or the Optional Deferral Date in the case of the first
installment), or (3) the elected combination of shares of the Common Stock and
cash, the amounts of which shall be determined in the manner specified above.
Any fraction of Deferral Unit will be paid to you on the relevant date in cash,
the amount of which shall be calculated in the manner specified above.
You will be required to satisfy all Federal, state and local tax and
payroll withholding obligations, and any other withholding obligations, arising
in respect of any distribution of shares of Common Stock or cash to you. To the
extent there is sufficient cash available, such withholding obligations will be
deducted from your distribution. To the extent the amount of cash to be
distributed is not sufficient to satisfy all withholding obligations, you will
be required to pay such withholding obligations as a condition to your receipt
of any distribution of shares of the Common Stock.
In the event of your death at any time prior to the Mandatory Deferral
Date, your account balance will be paid in cash in a lump sum on the later of
(a) the fifth business day following the Mandatory Deferral Date or (b) the
fifth business day of the calendar year following the calendar year during which
your date of death occurs. In the event of your death at any time following the
Mandatory Deferral Date and prior to the distribution of your account, the
entire balance of your account shall be paid in cash on the anniversary of the
Mandatory Deferral Date next following your date of death.
In the event of any stock dividend, stock split, recapitalization, merger,
split-up, spin-off or other change affecting the Common Stock of the Company,
the Deferral Units in your account shall be adjusted in the same manner and
proportion as the change to the Common Stock.
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Any notice to you under this Grant Agreement shall be sufficient if in
writing and if delivered to you or mailed by registered mail directed to you at
the address on record in the Executive Compensation Department. Any notice to
the Company under this Grant Agreement shall be sufficient in writing and if
delivered to the Executive Compensation Department of the Company in Akron,
Ohio, or mailed by registered mail directed to the Company for the attention of
the Executive Compensation Department at 0000 Xxxx Xxxxxx Xxxxxx, Xxxxx, Xxxx
00000-0000. Either you or the Company may, by written notice, change the
address.
Dated: December 3, 1996 THE GOODYEAR TIRE & RUBBER COMPANY
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Chairman of the Board
Grant Agreement as amended,
received and accepted:
____________________________________________ Date:December ____ , 1996
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ANNEX A
PERFORMANCE GOALS
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Performance Goals are based on the aggregate earnings per share of Goodyear
Common Stock for the period January 1, 1994 through December 31, 1996.
MINIMUM PERFORMANCE GOAL FOR PAYMENT
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In order for there to be a distribution under this Grant, the aggregate earnings
per share shall be at least $10.27 for the three-year period beginning January
1, 1994.
PERFORMANCE UNIT DISTRIBUTION SCHEDULE
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Unit distributions are payable 50 percent in shares of the Company's Common
Stock and 50 percent in cash.
Aggregate Earnings % of
Per Share Unit Distribution
1/1/94 - 12/31/96 Based on Grant
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$12.27 150 %
12.02 140
11.77 130
11.52 120
11.27 110
11.02 100
10.77 90
10.52 85
10.27 80
<10.27 0
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